The layer 1 smart contract ecosystem mirrors the monopolistic market structure and likely encourages over marketing and under delivery.
In economics, monopolistic competition represents market structure where
-- Many firms offer similar but slightly differentiated products.
-- They target similar use cases or markets.
-- Consumers face choice overload, but no one product is perfect.
-- Firms engage in branding, hype, or technical tweaks to stand out.
Layer 1 smart contract ecosystem fits the bill as:
- There are dozens of Layer 1s, offering largely similar core product ofdDistributed ledger + smart contracts.
- These products are slightly differentiated in terms of Consensus (PoW, PoS), speed, finality, dev tooling, community.
- All are involved in high marketing spend (look at Solana, Avalanche, Cardano).
- There is friction when switching L1s (wallets, gas costs, bridges).
No clear dominant winner: While Ethereum leads in DeFi and NFTs, Solana, Avalanche, and others have their niches.
What does it mean for users
- High user costs and marginal improvements.
- Liquidity fragmentation - here is where bridges and other tech comes into play, but the question is the Bridge ecosystem also the case of monopolistic market?
- Duplicative infra and protocol warns over real innovation.
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